Timor-Leste’s celebrated journey to statehood violently unravelled in 2006. Why did the young state stumble so badly, given the overwhelming national consensus for independence and firm international support for reconstruction? This article argues that the city is central to state-making by mediating between forces of external and internal integration to build prosperity, citizenship and security, particularly in the context of fragile states. While external integration denotes the opening up of the state to the international community and its market, internal integration is about embedding economic, political and security aspects of state-making. The case of Timor-Leste illustrates these processes and how the urban crisis of 2006–07 occurred when the two forms of integration undermined, rather than reinforced, each other.